Value Investing isn’t a new concept. Some of the more prominent investors we know are, in fact, value investors.
Based on the ideas that were taught at Columbia Business School by Benjamin Graham and David Dodd, value investing involves unearthing companies with sound fundamentals, which stocks have been undervalued by the market.
You see, regardless of whether Value investing in Singapore, Asia or around the world, stock prices fluctuate all the time, reacting to the good or bad news, amongst other factors. These prices may not necessarily reflect the long term value of a stock.
This long-term value, otherwise known as intrinsic value, is the benchmark value investors look at when determining whether if a stock is worth investing in at a particular price.
An oversimplified an example is buying a particular stock for only $0.50 on the market when you know it’s truly worth $1 and that the market hasn’t recognised it yet.
This difference in market price and the intrinsic value is what’s known as the “margin of safety“.
Of course, the crux is in deciding what “sound fundamentals” mean and subsequently how to determine the intrinsic value of a stock.
One distinction that is important to make is to understand the difference between investing and trading.
More often than not, trading involves the regular buying and selling of shares in the stock market based on price movements. Traders depend on price charts, complicated software, buy/sell signals to make their move, and in the process hope they predict price movements correctly.
In a way, one could say that trading is speculative in nature.
Investors, on the other hand, don’t buy and sell shares regularly in hopes of making profits from price differentials. Instead, they look at companies that are doing well, have sound management teams in place, have proven track records, and show that they have growth potential.
And usually, as long as these factors remain valid, investors will stay invested, enjoy capital gains and dividend payouts (aka passive income).
Furthermore, once you put your money in, so to speak, you can “go to sleep” instead of monitoring the price charts and worrying about price movements.
Should you do trading or value investing?
There’s no right or wrong; just what serves you or not.
Warren Buffett, the richest investor in the world, is a value investor. So are the likes of Peter Lynch, Sir John Templeton, Benjamin Graham … just to name a few.
If you like the idea of putting your money into something of value that will continue to contribute to the economy, if you like the sound of not having to stare at complex charts or using complicated software, if you understand the POWER of compounding and you’d like to make 15% to 25% returns on your investments every single year, value investing mastery course could be for you.
What’s important is to get yourself educated about Value growth workshop, so that you can invest consistently and safely instead of handing your money over to supposed commissions-based “financial advisors” who may not necessarily have your best interests at heart.
Getting started is easy. You can take your first step here to find out about Value investing course in Singapore.